BETHESDA, Md., Aug. 11, 2014 /PRNewswire/ -- Chindex
International, Inc. (NASDAQ: CHDX), an American healthcare company
providing premium quality healthcare services in China through the operations of United Family
Healthcare ("UFH"), a network of private primary care hospitals and
affiliated ambulatory clinics, today announced financial results
for the second quarter ended June 30,
2014.
Second Quarter 2014 Financial Highlights
- Revenue from healthcare services increased 21% to
$55.5 million from $46.0 million in the prior year period.
- Adjusted EBITDA increased 42% to $10.3 million from $7.3
million in the prior year period.
- Income from operations decreased 3% to $1.8 million from $1.9
million in the prior year period.
- Net loss was $693,000, or
$(0.04) per diluted share, compared
to net loss of $122,000, or
$(0.01) per diluted share, in the
prior year period.
- Merger transaction expenses were $2.0
million.
Roberta Lipson, President and CEO
of Chindex, commented, "The second quarter was characterized by
continued expansion of our network of hospitals and clinics, and
broadening of our scope of services. The United Family Healthcare
Financial Street Clinic opened in May
2014, representing our first facility in western
Beijing. Along with our Haidian
hospital, which is currently under construction, this is part of
our focused effort to reach more patients in Beijing's finance and technology centers."
"Our results this quarter reflect substantial development
expenses from these expansion activities as well as expenses
related to our pending merger. We are continuing our efforts to
strategically expand our network and service scope to bring
international-standard, premium healthcare services to more people
in China," concluded Ms.
Lipson.
Business Updates
As previously announced, the Company has entered into an amended
and restated merger agreement (the "Amended Agreement") with a
buyer consortium (the "Buyer Consortium") comprised of an affiliate
of TPG, an affiliate of Shanghai Fosun Pharmaceutical (Group) Co.,
Ltd., Ms. Lipson and a merger subsidiary. Pursuant to the Amended
Agreement, at the effective time of the merger, the Company will
become privately owned and unaffiliated stockholders will be
entitled to receive merger consideration of $24.00 per share. As previously announced, the
merger is not subject to a financing condition and, assuming the
satisfaction of conditions specified in the Amended Agreement, the
Company expects the merger to close in the second half of 2014.
Second Quarter 2014 Financial Results
Second quarter 2014 revenue from healthcare services increased
21% to $55.5 million from
$46.0 million in the prior year
period. These results reflect growth of inpatient and outpatient
volume across the United Family Healthcare network as well as
increased contributions from the Company's new facilities in
Beijing. Overall, outpatient
services contributed 57% of revenue while inpatient services
contributed 43%, compared with 58% and 42%, respectively, in the
prior year period. By service line, surgical services contributed
22.5%; OB/GYN contributed 13.4%; pediatrics contributed 8.2%;
ancillary services, including laboratory, radiology and pharmacy,
contributed 27.7%; internal medicine contributed 3.4%; emergency
room contributed 2.9%; dental contributed 2.8%; family medicine
2.2% and other clinical service lines contributed 16.9% of
revenue.
Operating expenses in the second quarter 2014 increased 22% to
$53.6 million from $44.1 million in the prior year period. The
increase was primarily driven by salaries, wages and benefits
expenses, which increased 15% over the second quarter 2013 from
$26.8 million to $30.8 million, and merger transaction expenses of
$2.0 million, which include fees for
legal and other professional services related to the Company's
pending merger. The increase in salaries, wages and benefits
reflects both an increase in headcount to support revenue growth
and development activities for new facilities and services and a
new government mandate on increased social benefits. Development,
pre- and post-opening and start-up expenses were $3 million, the same as in the prior year period.
These expenses were driven by development projects, including
expansion of the outpatient clinics at Beijing United Family
Hospital and construction of new hospitals in Beijing and Qingdao.
Adjusted EBITDA in the second quarter of 2014 increased 42% to
$10.3 million, compared to
$7.3 million in the prior year
period. The Adjusted EBITDA results show continued growth of the
Company's core primary care business as well as growth from
recently-expanded surgical services.
Income from operations was $1.8
million, compared to $1.9
million in the prior year period.
The Company recorded a $2.2
million provision for taxes in the second quarter of 2014,
compared to the tax provision of $1.7
million in the prior year period. As in past quarters, the
current period provision continued to be impacted by a higher tax
rate due to losses in development and start-up entities for which
the Company cannot currently recognize tax benefits.
Net loss for the quarter ended June 30,
2014 was $693,000, or
$(0.04) per diluted share, compared
to net loss of $122,000, or
$(0.01) per diluted share, in the
prior year period. The Company's minority interest in CML
represented a loss of $174,000 during
the recent period compared to a loss of $387,000 in the prior year period. For the second
quarter of 2014, weighted average diluted shares outstanding were
17.8million.
As of June 30, 2014, the Company
had $39.3 million in unrestricted
cash and cash equivalents.
First Half 2013 Financial Results
During the first half of 2014, revenue from healthcare services
increased 20% to $105.3 million from
$87.5 million in the prior year
period, reflecting growth of inpatient and outpatient volume across
the United Family Healthcare network as well as increased
contributions from the Company's new facilities in Beijing. Outpatient services contributed 58%
of revenue and inpatient services contributed 42% of revenue in the
first half of 2014, which represents the same distribution as in
the first half of 2013. By service line, surgical services
contributed 20.6%, OB/GYN contributed 13.8%, pediatrics contributed
9.0%, ancillary services contributed 28.0%, internal medicine
contributed 3.3%, emergency room contributed 2.9%, dental
contributed 3.0%, family medicine 2.2% and other services
contributed 17.2% of revenue.
Operating expenses for the first half of 2014 increased 26% to
$105.0 million from $83.1 million in the prior year period.
Development, pre-opening and start up expenses increased to
$7.0 million from $5.4million in the prior year. Income from
operations for the first half of 2014 was $374,000, compared to $4.5
million in the prior year period. This decrease largely
reflects the $5.3 million in merger
transaction expenses incurred in the first half of 2014 as compared
to $192,000 in merger transaction
expenses in the prior year period. Adjusted EBITDA was
approximately $19.4million compared
to $14.7 million in the prior year
period. The Adjusted EBITDA results show continued growth of the
Company's core primary care business as well as growth from
recently-expanded surgical services.
Provision for taxes was $3.8
million, compared to $3.6
million in the prior year period. Net loss was $4.2 million, or $(0.24) per diluted share, compared to net loss
of $184,000, or $(0.01) per diluted share, in the first half of
2013. For the first half of 2014 ended June
30, 2014, weighted average diluted shares outstanding were
17.8million.
Chindex Medical Limited
For Chindex Medical Limited (CML), a joint venture between
Shanghai Fosun Pharmaceutical (Group) Co., Ltd. and Chindex
International, Chindex recognized its 30% interest in CML's net
loss using the equity method of accounting since the acquisition of
Alma Lasers, Inc. on May 27,
2013.
In the second quarter of 2014, Chindex recognized a loss of
$174,000 for its equity interest in
CML. For the first half of 2014, the Company recognized a loss of
$524,000 million for its equity
interest in CML.
The operating results of CML in the first half of 2014 continued
to be negatively impacted by the overall slowdown in the capital
medical equipment markets in China
as a result of restructuring at the Ministry of Finance,
uncertainty surrounding proposed reforms and the disruption to
normal hospital purchasing activity due to the government campaign
to improve compliance in the public hospitals' purchasing
activities.
Non-GAAP Measures
The Company presents Adjusted EBITDA to better illustrate
ongoing operational results. Adjusted EBITDA is defined as income
(loss) before interest expense, interest and other income, income
taxes, depreciation and amortization, and also excludes
development, pre-opening and start-up expenses related to new and
pending hospitals and clinics and equity in earnings (loss) of
unconsolidated affiliate and nonrecurring transaction costs. The
Company anticipates recurring development, pre-opening and start-up
expense and notes that such expense is a basic element of the long
term growth plan. Management believes that providing an Adjusted
EBITDA analysis to investors is a helpful metric to better
illustrate the Company's operations, including development plans,
and changes in presentation from historical periods. The Company
uses Adjusted EBITDA for business planning and other purposes.
Other companies may calculate Adjusted EBITDA differently, and
therefore Chindex's Adjusted EBITDA may not be comparable to
similarly titled measures of other companies. Adjusted EBITDA is
not a measure of financial performance under U.S. generally
accepted accounting principles (GAAP), and should not be considered
in isolation or as an alternative to net income (loss), cash flows
from operating activities and other measures determined in
accordance with GAAP. Items excluded from Adjusted EBITDA are
significant and necessary components to the operations of the
Company's business, and, therefore, Adjusted EBITDA should only be
used as a supplemental measure of operating performance.
About Chindex International, Inc.
Chindex is an American healthcare company providing premium
quality healthcare services in China through the operations of United Family
Healthcare, a network of private primary care hospitals and
affiliated ambulatory clinics. United Family Healthcare currently
operates in Beijing, Shanghai, Tianjin and Guangzhou with a future facility under
construction in Qingdao. The
Company also provides medical capital equipment and products
through Chindex Medical Ltd., a joint venture company with
manufacturing and distribution businesses serving both domestic
China and export markets. With
more than thirty years of experience, the Company's strategy is to
continue its growth as a leading integrated health care provider in
the Greater China region. Further
Company information may be found at the Company's website at
http://www.chindex.com.
Safe Harbor Statement
Statements made in this press release relating to plans,
strategies, objectives, economic performance and trends and other
statements that are not descriptions of historical facts may be
forward-looking statements within the meaning of Section 27A of the
Securities Act of 1933, as amended (the "Securities Act"), and
Section 21E of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"). Forward-looking information is inherently subject
to risks and uncertainties, and actual results could differ
materially from those currently anticipated due to a number of
factors, which include, but are not limited to, the factors set
forth under the heading "Risk Factors" in the Company's Annual
Report on Form 10-K for the year ended December 31, 2013, updates and additions to those
"Risk Factors" in the Company's interim reports on Form 10-Q, Forms
8-K and in other documents filed by us with the Securities and
Exchange Commission from time to time. Forward-looking statements
may be identified by terms such as "may," "will," "should,"
"could," "expects," "plans," "intends," "anticipates," "believes,"
"estimates," "predicts," "forecasts," "potential," or "continue" or
similar terms or the negative of these terms. Although the Company
believes that the expectations reflected in the forward-looking
statements are reasonable, the Company cannot guarantee future
results, levels of activity, performance or achievements. The
Company has no obligation to update these forward-looking
statements.
Financial Summary Attached
CONTACT: ICR, Inc., Bill Zima,
+86-10-6583-7511, +1-646-328-2510
CHINDEX
INTERNATIONAL, INC.
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
(in thousands except share and per share data)
(Unaudited)
|
|
|
|
Three months ended
June 30,
|
|
Six months ended
June 30,
|
|
|
|
2014
|
|
2013
|
|
2014
|
|
2013
|
|
|
|
|
|
|
|
|
|
|
Healthcare services
revenue
|
$ 55,453
|
|
$ 45,977
|
|
$ 105,338
|
|
$ 87,542
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses
|
|
|
|
|
|
|
|
|
Salaries, wages and
benefits
|
30,786
|
|
26,834
|
|
58,822
|
|
49,497
|
|
Other operating
expenses
|
6,579
|
|
5,642
|
|
13,019
|
|
11,274
|
|
Supplies and
purchased medical services
|
6,970
|
|
5,590
|
|
12,925
|
|
10,555
|
|
Bad debt
expense
|
460
|
|
1,140
|
|
1,574
|
|
2,119
|
|
Depreciation and
amortization
|
3,410
|
|
2,353
|
|
6,652
|
|
4,655
|
|
Lease and rental
expense
|
3,371
|
|
2,410
|
|
6,636
|
|
4,771
|
|
Merger transaction
expenses
|
2,035
|
|
109
|
|
5,336
|
|
192
|
|
|
|
53,611
|
|
44,078
|
|
104,964
|
|
83,063
|
|
|
|
|
|
|
|
|
|
|
Income from
operations
|
1,842
|
|
1,899
|
|
374
|
|
4,479
|
|
|
|
|
|
|
|
|
|
|
Other income
and (expenses)
|
|
|
|
|
|
|
|
|
Interest
income
|
226
|
|
241
|
|
451
|
|
489
|
|
Interest
expense
|
(389)
|
|
(226)
|
|
(748)
|
|
(328)
|
|
Equity in loss of
unconsolidated affiliate
|
(174)
|
|
(387)
|
|
(524)
|
|
(1,287)
|
|
Miscellaneous income
- net
|
40
|
|
39
|
|
60
|
|
37
|
|
|
|
|
|
|
|
|
|
|
Income (loss) before
income taxes
|
1,545
|
|
1,566
|
|
(387)
|
|
3,390
|
Provision for income
taxes
|
(2,238)
|
|
(1,688)
|
|
(3,820)
|
|
(3,574)
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$ (693)
|
|
$ (122)
|
|
$ (4,207)
|
|
$ (184)
|
|
|
|
|
|
|
|
|
|
|
Net loss per common
share - basic
|
$ (.04)
|
|
$ (.01)
|
|
$ (.24)
|
|
$ (.01)
|
|
|
|
|
|
|
|
|
|
|
Weighted average
shares outstanding - basic
|
17,813,312
|
|
16,582,068
|
|
17,750,642
|
|
16,566,004
|
|
|
|
|
|
|
|
|
|
|
Net loss per common
share - diluted
|
$ (.04)
|
|
$ (.01)
|
|
$ (.24)
|
|
$ (.01)
|
|
|
|
|
|
|
|
|
|
|
Weighted average
shares outstanding - diluted
|
17,813,312
|
|
16,582,068
|
|
17,750,642
|
|
16,566,004
|
CHINDEX
INTERNATIONAL, INC.
CONSOLIDATED
CONDENSED BALANCE SHEETS
(in thousands,
except share data)
(Unaudited)
|
|
|
June 30,
2014
|
|
December 31,
2013
|
|
ASSETS
|
|
|
|
Current
assets:
|
|
|
|
|
Cash and cash
equivalents
|
$ 39,340
|
|
$ 33,107
|
|
Restricted
cash
|
1,272
|
|
1,286
|
|
Accounts receivable,
less allowance for doubtful accounts of $15,775and $14,338,
respectively
|
24,960
|
|
23,041
|
|
Receivables from
affiliates
|
1,870
|
|
2,897
|
|
Inventories of
supplies, net
|
2,975
|
|
2,781
|
|
Deferred income
taxes
|
5,208
|
|
4,763
|
|
Other current
assets
|
5,236
|
|
3,787
|
|
Total current assets
|
80,861
|
|
71,662
|
Restricted cash and
sinking funds
|
18,391
|
|
19,262
|
Investment in
unconsolidated affiliate
|
33,559
|
|
34,178
|
Property and
equipment, net
|
115,286
|
|
113,838
|
Noncurrent deferred
income taxes
|
905
|
|
811
|
Other
assets
|
4,186
|
|
4,817
|
|
Total assets
|
$ 253,188
|
|
$ 244,568
|
|
|
|
LIABILITIES AND
STOCKHOLDERS' EQUITY
|
|
|
|
Current
liabilities:
|
|
|
|
|
Short-term
debt
|
$ 4,336
|
|
$ 3,648
|
|
Accounts
payable
|
12,567
|
|
11,705
|
|
Payable to
affiliates
|
2,746
|
|
1,977
|
|
Accrued
expenses
|
14,470
|
|
17,984
|
|
Other current
liabilities
|
14,526
|
|
11,408
|
|
Income taxes
payable
|
2,821
|
|
3,658
|
|
Total current
liabilities
|
51,466
|
|
50,380
|
Long-term
debt
|
36,450
|
|
26,715
|
Long-term deferred
rent
|
1,530
|
|
1,223
|
Long-term deferred
tax liability
|
229
|
|
231
|
|
Total liabilities
|
89,675
|
|
78,549
|
Commitments and
contingencies
|
|
|
|
Stockholders'
equity:
|
|
|
|
|
Preferred stock, $.01
par value, 500,000 shares authorized, none issued
|
-
|
|
-
|
|
Common stock, $.01
par value, 28,200,000 shares authorized, including
|
|
|
|
|
3,200,000 designated
Class B:
|
|
|
|
|
Common stock –
17,100,747 and 16,934,753 shares issued and
|
|
|
|
|
outstanding at June
30, 2014 and December 31, 2013,
|
|
|
|
|
respectively
|
171
|
|
169
|
|
Class B stock – 1,162,500 shares issued and outstanding
at
|
|
|
|
|
June 30, 2014 and
December 31, 2013, respectively
|
12
|
|
12
|
|
Additional paid-in
capital
|
143,489
|
|
140,809
|
|
Retained
earnings
|
8,243
|
|
12,450
|
|
Accumulated other
comprehensive income
|
11,598
|
|
12,579
|
|
Total
stockholders' equity
|
163,513
|
|
166,019
|
|
Total liabilities and stockholders' equity
|
$ 253,188
|
|
$ 244,568
|
|
CHINDEX
INTERNATIONAL, INC.
CONSOLIDATED
CONDENSED STATEMENTS OF CASH FLOWS
(in
thousands)
(Unaudited)
|
|
|
Six months ended
June 30,
|
|
|
2014
|
|
2013
|
OPERATING
ACTIVITIES
|
|
|
|
Net loss
|
$ (4,207)
|
|
$ (184)
|
Adjustments to
reconcile net loss to net cash provided by (used in)
|
|
|
|
|
operating
activities:
|
|
|
|
|
Depreciation and
amortization
|
6,652
|
|
4,655
|
|
Inventory write
down
|
3
|
|
10
|
|
Provision for
doubtful accounts
|
1,351
|
|
2,119
|
|
Loss on disposal of
property and equipment
|
9
|
|
8
|
|
Equity in net loss of
unconsolidated affiliate
|
524
|
|
1,287
|
|
Deferred income
benefit
|
(589)
|
|
(519)
|
|
Stock based
compensation
|
2,209
|
|
2,234
|
|
Foreign exchange loss
(gain)
|
237
|
|
(286)
|
|
Amortization of debt
issuance costs
|
272
|
|
5
|
|
Amortization of debt
discount
|
-
|
|
124
|
Changes in operating
assets and liabilities:
|
|
|
|
|
Accounts
receivable
|
(3,495)
|
|
(4,967)
|
|
Receivables from
affiliates
|
1,027
|
|
(612)
|
|
Inventories of
supplies
|
(224)
|
|
(425)
|
|
Other current assets
and other assets
|
(1,191)
|
|
(2,257)
|
|
Accounts payable,
accrued expenses, other current liabilities
|
|
|
|
|
and deferred
rent
|
1,119
|
|
(4,232)
|
|
Payable to
affiliates
|
769
|
|
(12)
|
|
Income taxes
payable
|
(807)
|
|
(878)
|
Net cash provided by
(used in) operating activities
|
3,659
|
|
(3,930)
|
INVESTING
ACTIVITIES
|
|
|
|
|
Purchases of property
and equipment
|
(9,137)
|
|
(5,899)
|
Net cash used in
investing activities
|
(9,137)
|
|
(5,899)
|
FINANCING
ACTIVITIES
|
|
|
|
|
Restricted cash from
IFC RMB loan sinking funds
|
446
|
|
444
|
|
Restricted cash from
Exim loan
|
252
|
|
-
|
|
Proceeds from
debt
|
12,000
|
|
11,000
|
|
Repayment of
debt
|
(1,469)
|
|
(800)
|
|
Repurchase of
restricted stock for income tax withholding
|
(355)
|
|
(220)
|
|
Proceeds from
exercise of stock options
|
828
|
|
114
|
Net cash provided by
financing activities
|
11,702
|
|
10,538
|
Effect of foreign
exchange rate changes on cash and cash equivalents
|
9
|
|
(87)
|
Net increase in cash
and cash equivalents
|
6,233
|
|
622
|
Cash and cash
equivalents at beginning of period
|
33,107
|
|
33,184
|
Cash and cash
equivalents at end of period
|
$ 39,340
|
|
$ 33,806
|
|
|
|
|
|
Supplemental
disclosures of cash flow information:
|
|
|
|
Cash paid for
interest
|
$ 387
|
|
$ 57
|
Cash paid for
taxes
|
$ 5,197
|
|
$ 5,005
|
|
|
|
|
|
Non-cash investing
and financing activities consist of the following:
|
|
|
|
Change in property
and equipment additions included in accounts
|
|
|
|
payable and payable
to affiliates
|
$ (41)
|
|
$ 1,691
|
The table below
reconciles our consolidated net (loss) income to Adjusted EBITDA
(in thousands)
|
|
Three months ended
June 30,
|
|
Six months ended
June 30,
|
|
2014
|
2013
|
|
2014
|
2013
|
|
|
|
|
|
|
Consolidated net
loss
|
($693)
|
($122)
|
|
($4,207)
|
($184)
|
|
|
|
|
|
|
Adjustments:
|
|
|
|
|
|
Depreciation and amortization
|
3,410
|
2,353
|
|
6,652
|
4,655
|
Provision for income taxes
|
2,238
|
1,688
|
|
3,820
|
3,574
|
Interest expense
|
389
|
226
|
|
748
|
328
|
Interest and other income, net
|
-266
|
-280
|
|
-511
|
-526
|
Development, pre-opening and start-up expense
|
3,049
|
2,895
|
|
7,003
|
5,360
|
Equity in loss of unconsolidated affiliate
|
174
|
387
|
|
524
|
1,287
|
Nonrecurring transactions costs
|
2,035
|
109
|
|
5,336
|
192
|
|
11,029
|
7,378
|
|
23,572
|
14,870
|
|
|
|
|
|
|
Adjusted
EBITDA
|
$10,336
|
$7,256
|
|
$19,365
|
$14,686
|
SOURCE Chindex International, Inc.